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Energy efficiency, the low hanging fruit that grows back

Just like some print columnist run classic columns when they are on vacation, I’m rerunning this inspirational  energy efficiency story, first posted July 25, 2008.

Energy efficiency is by far the biggest low-carbon resource available. It is also, as we’ll see, every bit as renewable as wind power, solar photovoltaic, and Concentrated solar thermal power Solar Baseload.

People who have little experience with what serious energy efficiency investments can do for a company or a state “” this means you, neoclassical economists who consistently overestimate the cost of climate mitigation! - think it is a one-shot resource wherein you pick the low hanging fruit. In fact, fruit grow back. The efficiency resource never gets exhausted because technology keeps improving and knowledge spreads to more and more people.

After leading the country in comprehensive efficiency efforts that have kept per capita electricity demand flat for three decades, California does not merely believe it can continue at this pace, they plan to accelerate their efforts and actually keep electricity demand itself flat. I have discussed California’s efforts and plans in previous posts (see Policies in Need of Californication and California makes efficiency “business as usual”), and will discuss them further in Part 4.

The focus of this post is the best corporate example of the inexhaustible nature of the energy efficiency resource “” Dow Chemical’s Louisiana division.

You might have predicted that by 1982, after two major energy shocks, if any company in the country had captured the low-hanging fruit of energy savings, it would be one as energy intensive as a world-class chemical manufacturer. Nonetheless, energy manager for the division’s more than 20 plants, Ken Nelson, began a yearly contest in 1982 to identify and fund energy-saving projects. His success was nothing short of astonishing.

The first year had 27 winners requiring a total capital investment of $1.7 million with an average annual return on investment (ROI) of 173%. After those projects, many in Dow felt that there couldn’t be others with such high returns. The skeptics were wrong. The 1983 contest had 32 winners requiring a total capital investment of $2.2 million in a 340% return - a savings of the company’s $7.5 million in the first year and every year after that.

Even as fuel prices declined in the mid-1980s, the savings kept growing.  Contest winners increasingly achieved the economic gains through process redesign to improve production yield and capacity. By 1988, these productivity gains exceeded the energy and environmental gains. The average return to the 1989 contest was the highest ever, an astounding 470% in 1989, 64 projects costing $7.5 million saved the company $37 million a year “” a payback of 11 weeks.

Anyone would predict that after 10 years, and nearly 700 projects, the 2000 employees would be tapped out of ideas. Yet the contest in 1991, 1992, 1993 each had in excess of 120 winners with an average our ally of 300%. Total savings to Dow from the projects of just those three years exceed $75 million a year.

Here’s the shocking part:

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Energy and Global Warming News for August 10: Worlds poorest women set to suffer most from climate change; American Psychological Association examines the behavior behind climate inaction

World’s poorest women will bear brunt of climate change

President Jacob Zuma has identified climate change and its impact on women as a critical area of concern. “Natural disasters affect women directly and severely because of their social roles and the impacts of poverty. When there are floods, cyclones, or drought, women bear the brunt,” he said recently.

In December this year, leaders from around the world will gather in Copenhagen to negotiate a new global climate deal.

If a fair and effective deal is not reached, the poorest women in developing nations like ours stand to suffer the most.

As things stand now it would appear that leaders, especially from industrialised countries, are not putting the needs of the vulnerable and poor on their agenda. They have made very little substantive commitments within the negotiations….

Currently, up to two billion people live in extreme poverty worldwide (which means they live on less that US2 a day).

Two-thirds of these are women. The reality is that climate change will worsen existing poverty, particularly in developing nations that are heavily dependent on natural resources.

According to the Intergovernmental Panel on Climate Change, the threats to Africa are severe. It is expected that agricultural yields will decrease by 50 percent by 2050, with a total of 75million-250m people exposed to increased water stress, about 70 million people facing the risk of coastal flooding because of sea level rise by 2080, and there will be a significant increase in health impacts.

Psychological Factors Help Explain Slow Reaction To Global Warming

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Suggestions for guest blog posts?

While I am on (70%) vacation, it seems like a good time to repost or excerpt some of the other terrific climate material on the blogosphere.

So I am soliciting suggestions for such articles.  You can suggest your own post.  I can’t guarantee I will reprint everything.  And I certainly prefer things from blogs that don’t already have high readership, say, blogs with web sites that rank greater than 100,000 on Alexa.

Boxer considers modified ‘price collar’ for climate bill

Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) is considering a “price collar” for her global warming bill that could help to curb the economic costs from a cap-and-trade program.

“I don’t know why we can’t consider this as one more way to give more certainty,” Boxer said during a hearing today. “I’m looking at it, is what I’m saying.”

Boxer did not go into much detail about what she means when she says a “price collar” is possible for the draft legislation expected early next month. Indeed, the concept does mean different things to different people in the often complex and controversial global warming policy debate.

I try to stay ahead of the curve on climate science, clean energy solutions, and carbon politics.   This time my discussion of the price collar issue along with my specific proposal “How the Senate can fix cost containment in the climate bill with ‘price collar plus’ ” came less than 24 hours before the remarks that E&E News PM (subs. req’d) reported.

The article goes on to make clear that Boxer does not support the traditional — and environmentally flawed — price collar whereby the government to sells an unlimited number of allowances that represent no emissions reduction whatsoever at the ceiling price, but rather something closer to what I suggested:

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